Market conditions, not securities regulations, are largely to blame for the weakness in the junior mining business, suggests a new report from the British Columbia Securities Commission.
Ahead of its annual industry conference on Thursday, the BCSC released a report it commissioned from KPMG to examine the recent downturn in B.C.’s junior mining sector. It reports that industry executives largely believe that the cyclical nature of the mining industry, and current economic and market conditions are primarily to blame for its woes.
“Significant contributing factors identified include metals prices; slow economic growth; global financial issues; the need for senior mining companies to rid themselves of ‘toxic assets’ and problematic projects; and resistance to higher risk investments from both institutional and retail investors,” it says, adding that regulatory costs are considered a lesser issue.
Moreover, easing regulation likely won’t be enough to rejuvenate the business, it suggests. While there are some tweaks that regulators could make to ease that burden on companies, the industry itself has to return to health — with fewer junior mining firms, and stronger senior miners — seen as necessary to restore investor confidence.